2021 Tennessee Code
Chapter 35 - Southern Dairy Compact
§ 43-35-101. Creation—general Provisions

The southern dairy compact is enacted into law by the Tennessee general assembly and is entered into on behalf of the state of Tennessee, with all other jurisdictions legally joining therein in a form substantially similar to the text adopted in this chapter. The compact shall become effective when enacted into law by at least two (2) other states within the compact group of states in a form substantially similar to the text as follows and when the consent of congress has been obtained. The text of the proposed compact is as follows:
Southern Dairy Compact
Article I. Statement of Purpose, Findings and Declaration of Policy
§ 1.  Statement of purpose, findings and declaration of policy.
The purpose of this compact is to recognize the interstate character of the southern dairy industry and the prerogative of the states under the United States constitution to form an interstate commission for the southern region. The mission of the commission is to take such steps as are necessary to assure continued viability of dairy farming in the south, and to assure consumers of an adequate, local supply of pure and wholesome milk.
The participating states find and declare that the dairy industry is an essential agricultural activity of the south. Dairy farms, and associated suppliers, marketers, processors and retailers are an integral component of the region's economy. Their ability to provide a stable, local supply of pure, wholesome milk is a matter of great importance to the health and welfare of the region.
The participating states further find that dairy farms are essential and they are an integral part of the region's rural communities. The farms preserve land for agricultural purposes and provide needed economic stimuli for rural communities.
In establishing their constitutional regulatory authority over the region's fluid milk market by this compact, the participating states declare their purpose that this compact neither displace the federal order system nor encourage the merging of federal orders. Specific provisions of the compact itself set forth this basic principle.
Designed as a flexible mechanism able to adjust to changes in a regulated marketplace, the compact also contains a contingency provision should the federal order system be discontinued. In that event, the interstate commission is authorized to regulate the marketplace in replacement of the order system. This contingent authority does not anticipate such a change, however, and should not be so construed. It is only provided should developments in the market other than establishment of this compact result in discontinuance of the order system.
By entering into this compact, the participating states affirm that their ability to regulate the price which southern diary farmers receive for their product is essential to the public interest. Assurance of a fair and equitable price for diary farmers ensures their ability to provide milk to the market and the vitality of the southern diary industry, with all the associated benefits.
Recent, dramatic price fluctuations, with a pronounced downward trend, threaten the viability and stability of the southern dairy region. Historically, individual state regulatory action had been an effective emergency remedy available to farmers confronting a distressed market. The federal order system, implemented by the Agricultural Marketing Agreement Act of 1937, establishes only minimum prices paid to producers for raw milk, without preempting the power of states to regulate milk prices above the minimum levels so established.
In today's regional dairy marketplace, cooperative, rather than individual state action is needed to more effectively address the market disarray. Under our constitutional system, properly authorized states acting cooperatively may exercise more power to regulate interstate commerce than they may assert individually without such authority. For this reason, the participating states invoke their authority to act in common agreement, with the consent of congress, under the compact clause of the constitution.
Article II. Definitions and Rules of Construction
§ 2.  Definitions.
For the purposes of this compact, and of any supplemental or concurring legislation enacted pursuant thereto, except as may be otherwise required by the context:
§ 3.  Rules of construction.
Article III. Commission Established
§ 4.  Commission established.
There is hereby created a commission to administer the compact, composed of delegations from each state in the region. The commission shall be known as the southern dairy compact commission. A delegation shall include not less than three (3) nor more than five (5) persons. Each delegation shall include at least one (1) dairy farmer who is engaged in the production of milk at the time of appointment or reappointment, and one (1) consumer representative. Delegation members shall be residents and voters of, and subject to such confirmation process as is provided for in, the appointing state. Delegation members shall serve no more than three (3) consecutive terms with no single term of more than four (4) years, and be subject to removal for cause. In all other respects, delegation members shall serve in accordance with the laws of the state represented. The compensation, if any, of the members of a state delegation shall be determined and paid by each state, but their expenses shall be paid by the commission.
§ 5.  Voting requirements.
All actions taken by the commission, except for the establishment or termination of an over-order price or commission marketing order, and the adoption, amendment or rescission of the commission's bylaws, shall be by majority vote of the delegations present. Each state delegation shall be entitled to one (1) vote in the conduct of the commission's affairs. Establishment or termination of an over-order price or commission marketing order shall require at least a two-thirds (2/3) vote of the delegations present. The establishment of a regulated area which covers all or part of a participating state shall require also the affirmative vote of that state's delegation. A majority of the delegations from the participating states shall constitute a quorum for the conduct of the commission's business.
§ 6.  Administration and management.
§ 7.  Rulemaking power.
In addition to the power to promulgate a compact over-order price or commission marketing orders as provided by this compact, the commission is further empowered to make and enforce such additional rules and regulations as it deems necessary to implement any provisions of this compact, or to effectuate in any other respect the purposes of this compact.
Article IV Powers of the Commission
§ 8.  Powers to promote regulatory uniformity, simplicity, and interstate cooperation.
The commission is hereby empowered to:
§ 9.  Equitable farm prices.
§ 10.  Optional provisions for pricing order.
Regulations establishing a compact over-order price or a commission marketing order may contain, but shall not be limited to, any of the following:
Article V. Rulemaking Procedure
Before promulgation of any regulations establishing a compact over-order price or commission marketing order, including any provision with respect to milk supply under article IV, section 9(f), or amendment thereof, as provided in article IV, the commission shall conduct an informal rulemaking proceeding to provide interested persons with an opportunity to present data and views. Such rulemaking proceeding shall be governed by section 4 of the federal Administrative Procedure Act, as amended (5 U.S.C. § 553). In addition, the commission shall, to the extent practicable, publish notice of rulemaking proceedings in the official register of each participating state. Before the initial adoption of regulations establishing a compact over-order price or a commission marketing order and thereafter before any amendment with regard to prices or assessments, the commission shall hold a public hearing. The commission may commence a rulemaking proceeding on its own initiative or may in its sole discretion act upon the petition of any person including individual milk producers, any organization of milk producers or handlers, general farm organizations, consumer or public interest groups, and local, state or federal officials.
§ 12.  Findings and referendum.
In addition to the concise general statement of basis and purpose required by section 4(b) of the federal Administrative Procedure Act, as amended (5 U.S.C. § 553(c)), the commission shall make findings of fact with respect to:
§ 13.  Producer referendum.
§ 14.  Termination of over-order price or marketing order.
The commission shall terminate any regulations establishing an over-order price or commission marketing order issued under this article whenever it finds that such order or price obstructs or does not tend to effectuate the declared policy of this compact.
The commission shall terminate any regulations establishing an over-order price or a commission marketing order issued under this article whenever it finds that such termination is favored by a majority of the producers who, during a representative period determined by the commission, has been engaged in the production of milk, the price of which is regulated by such order; but such termination shall be effective only if announced on or before such date as may be specified in such marketing agreement or order.
The termination or suspension of any order or provision thereof shall not be considered an order within the meaning of this article and shall require no hearing, but shall comply with the requirements for informal rulemaking prescribed by section 4 of the federal Administrative Procedure Act, as amended (5 U.S.C. § 553).
Article VI Enforcement
§ 15.  Records; reports; access to premises.
§ 16.  Subpoena; hearings and judicial review.
§ 17.  Enforcement with respect to handlers.
The commission is hereby authorized and empowered by its members and its properly designated officers to administer oaths and issue subpoenas throughout all signatory states to compel the attendance of witnesses and the giving of testimony and the production of other evidence.
Any handler subject to an order may file a written petition with the commission stating that any such order or any provision of any such order or any obligation imposed in connection therewith is not in accordance with law and praying for a modification thereof or to be exempted therefrom. The handler shall thereupon be given an opportunity for a hearing upon such petition, in accordance with regulations made by the commission. After such hearing, the commission shall make a ruling upon the prayer of such petition which shall be final, if in accordance with law.
Any violation by a handler of the provisions of regulations establishing an over-order price or a commission marketing order, or other regulations adopted pursuant to this compact shall:
Constitute a violation of the laws of each of the signatory states. Such violation shall render the violator subject to a civil penalty in an amount as may be prescribed by the laws of each of the participating states, recoverable in any state or federal court of competent jurisdiction. Each day such violation continues constitutes a separate violation; and
Constitute grounds for the revocation of license or permit to engage in the milk business under the applicable laws of the participating states.
With respect to handlers, the commission shall enforce the provisions of this compact, regulations establishing an over-order price, a commission marketing order or other regulations adopted hereunder by:
Commencing an action for legal or equitable relief brought in the name of the commission of any state or federal court of competent jurisdiction; or
Referral to the state agency for enforcement by judicial or administrative remedy with the agreement of the appropriate state agency of a participating state.
With respect to handlers, the commission may bring an action for injunction to enforce the provisions of this compact or the order or regulations adopted thereunder without being compelled to allege or prove that an adequate remedy of law does not exist.
Article VII. Finance
§ 18.  Finance of start-up and regular costs.
§ 19.  Audit and accounts.
The commission shall keep accurate accounts of all receipts and disbursements, which shall be subject to the audit and accounting procedures established under its rules. In addition, all receipts and disbursements of funds handled by the commission shall be audited yearly by a qualified public accountant and the report of the audit shall be included in and become part of the annual report of the commission.
The accounts of the commission shall be open at any reasonable time for inspection by duly constituted officers of the participating states and by any persons authorized by the commission.
Article VIII. Entry and Force; Additional Members and Withdrawal
§ 20.  Entry into force; additional members.
The compact shall enter into force effective when enacted into law by any three (3) states of the group of states composed of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia and when the consent of congress has been obtained.
§ 21.  Withdrawal from compact.
Any participating state may withdraw from this compact by enacting a statute repealing the same, but no such withdrawal shall take effect until one (1) year after notice in writing of the withdrawal is given to the commission and the governors of all other participating states. No withdrawal shall affect any liability already incurred by or chargeable to a participating state prior to the time of such withdrawal.
§ 22.  Severability.
If any part or provision of this compact is adjudged invalid by any court, such judgment shall be confined in its operation to the part or provision directly involved in the controversy in which such judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this compact. In the event congress consents to this compact subject to conditions, the conditions shall not impair the validity of this compact when the conditions are accepted by three (3) or more compacting states. A compacting state may accept the conditions of congress by implementation of this compact.

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